Introduction to shipping goods from China

Intro­duc­tion to ship­ping goods from Chi­na: We get ques­tions daily about how ship­ping works from main­land Chi­na and neigh­bor Hong Kong and what to con­si­der befo­re, during and after the pro­ducts have been pac­ka­ged by the manu­factu­rer and wai­ting to be sent over­se­as. The majo­ri­ty of small com­pa­ni­es impor­ting from Chi­na per­cei­ve that the pro­cess of sea freight is com­pli­ca­ted to manage, requi­ring huge volu­me, long esti­ma­ted deli­ve­ry times and having hid­den cost. The same com­pa­ni­es pre­fer sen­ding smal­ler pac­ka­ges more often by Air express with recog­ni­zed car­go ship­ping brands such as DHL, Fedex and UPS due con­ve­ni­ence and deli­ve­ry time – even if the cost is high(er).

In fact, the­re is some truth to the abo­ve. If not care­ful, one can easily make mista­kes wha­te­ver the deli­ve­ry met­hod. But the­re is no final solu­tion to logistics as many think. All deli­ve­ry met­hods should be con­si­de­red depen­ding on the com­pe­ti­tion, total volu­me, deli­ve­ry time, price and customs. We find it unef­fecti­ve though for a suc­cess­ful busi­ness to devour it’s focus and work­for­ce from it’s core busi­ness, pro­du­cing and sel­ling pro­ducts, to also try­ing to manage the logistics jung­le on a daily basis. Far East Rising is, on the other hand, using all the mar­ket infor­ma­tion and con­nec­tions to fil­ter the right deli­ve­ry met­hod for eve­ry uni­que cli­ent and pro­duct. It hap­pends that we intro­du­ce and com­bi­ne the goods of our cli­ents if they are sha­ring the same mar­ket to furt­her lower the sour­cing cost, pac­ka­ging cost, ship­ping cost with hig­her volu­me.

INCOTERMS

An inco­term is an uni­ver­sal and inter­na­tio­nal code used to deter­mi­ne if, whe­re and how respon­si­bi­li­ty for ship­ment is divi­ded between sup­pli­er and impor­ter. It is neces­sa­ry to understand inco­term when nego­ti­a­ting with sup­pli­er to be able to cal­cu­la­te the final cost of goods with inclu­sion of fees such as: har­bor fees, trans­por­ta­tion fees and other “hid­den fees”.

- EXW (EXWORKS)

EXW quo­ted price is the facto­ry’s price of the goods – no ship­ping is inclu­ded, buy­er covers all the cost. The buy­er has to, first­ly, arrange trans­port of the goods from the facto­ry to the har­bor port and then arrange the trans­port from the har­bor port in Chi­na to the final des­ti­na­tion. Only valid if impor­ter has his own team with logistics set up. More often than not, the sup­pli­er is more expe­ri­enced with trans­por­ting their own goods from the facto­ry to the har­bor port than any­bo­dy else.

- FOB (Free On Board)

FOB quo­ted price inclu­des trans­port of the goods from facto­ry to the har­bor port with appro­ved docu­ments and fees for export clea­rence. FOB requires the impor­ter to arrange freight with a for­war­ding com­pa­ny from Chi­na to the final des­ti­na­tion. FOB is a good and cheap(er) alter­na­ti­ve if the impor­ter has a reli­ab­le freight for­war­der com­pa­ny – somet­hing we at the Far East Rising can help with.

- CIF (Cost Insurance Freight)

CIF quo­ted price inclu­des all trans­port arra­ge­ments and fees from facto­ry or sup­pli­er to the nea­rest har­bor port of the final des­ti­na­tion. CIF does not inclu­de trans­port costs and admi­nist­ra­ti­ve fees such as unlo­a­ding, customs clea­ran­ce, har­bor fees, customs and VAT in the country of des­ti­na­tion. CIF is usu­al­ly very affor­dab­le on paper but has a high total cost when inclu­ding the exter­nal fees added on from the des­ti­na­tion har­bor port. 

- DAP / DDP (Delivered at Place)

DAP quo­ted price inclu­des all trans­port arra­ge­ments and fees from facto­ry or sup­pli­er to a spe­ci­fic deli­ve­ry add­ress at the final des­ti­na­tion; for examp­le, the buy­ers ware­house. Customs and import tax­es falls on the impor­ter and are not inclu­ded in the price. DAP is most sui­tab­le for inex­pe­ri­enced impor­ters who want to know the total cost of the good with all the fees inclu­ded from the start. This is an all-inclu­si­ve pac­kage that we at Far East Rising can pro­vi­de.